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California's Top Court Upholds Immunity for Cigarette Makers

08/06/02

The California Supreme Court ruled tobacco companies generally can't be sued for their conduct during a decadelong period of legal immunity, a decision that could make it easier for cigarette makers to defend themselves against future lawsuits in the stat

While the ruling doesn't offer the broad exemption from liability the industry sought, it does place hurdles in front of smokers who want to sue in California, a state that has become a critical tobacco-litigation battleground.
"This was a good decision for the industry," said Martin Feldman, a tobacco analyst at Merrill Lynch in New York. "The scale of the litigation threat in California has diminished because of these decisions, although serious challenges remain." The impact of the rulings will depend on how they are interpreted by trial-court judges in the future, he said.
Plaintiffs lawyers, however, said they will continue to bring and win tobacco cases. "I don't think it's going to make a whole lot of difference," said Madelyn J. Chaber, a San Francisco lawyer who argued the Supreme Court case for one of the plaintiffs. "For future cases, it will be easy to carve out" the 10-year period affected by the ruling, she said.
The court was asked to interpret a series of changes in state law. In 1987, the California Legislature passed a law essentially barring suits against cigarette makers on the grounds the dangers of smoking were common knowledge. The law took effect Jan. 1, 1988. State lawmakers later repealed the law, effective Jan. 1, 1998.
The plaintiffs -- two people who say they were made sick by smoking -- argued the repeal was retroactive and stripped cigarette manufacturers of the immunity they had been granted from 1988 through 1998. The tobacco industry argued it had immunity from almost all claims arising from conduct before 1998.
While the court decided the industry has 10 years of immunity, the immunity isn't absolute. The justices broadened an exception to the immunity rule, saying lawsuits can be brought by smokers who allege tobacco additives used during that time exposed them "to dangers beyond those commonly known to be associated with cigarette smoking."
The decision was closely watched after tobacco companies had lost three-straight cases in California. The latest defeat came in Los Angeles last summer, when a jury hit Philip Morris Cos. with $3 billion in punitive damages in the case of a smoker with lung cancer. The award was later cut by a judge to $100 million. All three cases are being appealed.
Jury selection in a fourth case, to be tried in Los Angeles, got under way Monday. Michael Piuze, the lawyer representing the plaintiff in that case, said he doesn't expect the start of the trial to be delayed by the Supreme Court's action. He said the rulings "will have virtually no effect" on how he tries his case.
Lawyers for Philip Morris and R.J. Reynolds Tobacco Holdings Inc. said the high court's rulings provide additional support to their quests to get the three losing verdicts reversed. Among other things, the ruling opens the door for the companies to request new trials by arguing evidence related to the company's behavior between 1988 and 1998 was improperly put before jurors.
Mr. Piuze, who won last summer's case against Philip Morris in Los Angeles, also said he believes that verdict will withstand appeal. "Ninety-eight to 99% of the evidence in that case was from before 1988," he said.
In the cases on appeal and future lawsuits, tobacco-industry lawyers said they could argue plaintiffs need to prove their smoking-related injuries were suffered before or after the 10-year immunity period, rather than during it.
"I think the rulings advance our position considerably," said William S. Ohlemeyer, associate general counsel of Philip Morris. "People can still file lawsuits, but this makes it clear that the evidence they can use is narrower than it was yesterday."
Among the evidence that could be excluded from future trials in California is the 1994 congressional testimony of tobacco-company chief executives, in which they said cigarettes weren't addictive, as well as other industry efforts to dispute the surgeon general's conclusion that smoking is addictive. Many of the most-damaging internal industry documents, however, predate 1988 and will be fair game for plaintiffs lawyers.
Industry watchers said they were pleased by the court's matter-of-fact language in the decision after a flurry of harshly worded opinions by other courts. "The tone is important," said David Adelman, an analyst at Morgan Stanley in New York. "This is a court that's going to have a lot of important decisions on tobacco."